Which of the following would likely lead to the most inflation?
A) if aggregate demand increases and aggregate supply increases
B) if aggregate demand decreases and aggregate supply decreases
C) if aggregate demand increases and aggregate supply decreases
D) if aggregate demand decreases and aggregate supply increases

Question

Which of the following would likely lead to the most inflation?  
A) if aggregate demand increases and aggregate supply increases 
B) if aggregate demand decreases and aggregate supply decreases 
C) if aggregate demand increases and aggregate supply decreases 
D) if aggregate demand decreases and aggregate supply increases

Quizplus · Accepted Answer

If aggregate demand increases and aggregate supply decreases, there will be a shortage of goods and services in the economy, leading to an increase in prices and thus the inflation. With other choices, either both aggregate demand and supply increase or decrease, resulting in a relatively stable price level.

Which of the Following Would Likely Lead to the Most